If you run a warehouse, you know the challenges of finding qualified workers.
In particular, it’s difficult to pay workers an appropriate amount.
You want to combat the challenge of low warehouse worker retention with an appropriate wage, but you still must remain profitable.
So, what should you do?
In this guide, you’ll learn the standards for warehouse minimum wages. You’ll also learn how automation is affecting this wage, and what the future of warehouse workers looks like.
But first, let’s take a brief look at the history of minimum wage workers.
The History of Minimum Wage
While many hiring managers don’t realize it, a minimum wage is a fairly new invention.
Before the Great Depression, the minimum wage in the US was up to companies. Some chose to improve their worker retention rates by increasing wages across the business.
The most notable example of this was Henry Ford’s “Five-Dollar Day” wage hike in 1903, which doubled the wages of his factory workers and caused a surge of new applicants.
Source: The Henry Ford
The first law in the US regulating minimum wage was passed at the tail end of the Great Depression in 1938, mandating that employers pay $0.25 per hour.
In 2017 dollars, this would be worth $4.34.
Since then, the minimum wage debate has been embroiled in controversy, with arguments on both sides of the issue.
Currently, the U.S. Federal Government requires congressional approval to increase the minimum wage. The last hike was in 2009, when the federal minimum wage was set at $7.25 per hour.
Currently, 28 states plus Washington, D.C. have higher standards on minimum wage.
Source: Department of Labor
In 2018, eighteen states will be rolling out new changes to their minimum wage policies, increasing over the federal rate or previous state-mandated wages.
The highest of these state-mandated wages are Washington at $11.50/hour, California at $11/hour, and Vermont and Arizona at $10.50/hour.
Of course, you need to abide by the regulations in your state, but many plants choose to go above state and federal requirements.
So, what does the current landscape look like?
Current Minimum Wage Standards for Warehouse Workers
Warehouse workers typically make more than minimum wage across the United States.
Despite remaining stagnant for the past 15 years, wages for warehouse workers have recently started to pick up.
After staying barely above $10 an hour from 2002-2013, the last few years has seen the average wage increase to over $12 per hour.
Source: Wall Street Journal
Based on Bureau of Labor Management data from January 2018, the median minimum wage for US warehouse workers is $14 per hour.
But this median might not be a fair representation of the prices set by some of the key players in the warehouse industry.
This summer, an article on Amazon.com’s minimum wage standards showed that the average worker makes around $12 per hour.
These lower figures have historically been met with some controversy since many claims this amount isn’t a livable wage.
At $12 per hour, a warehouse worker would make around $24,000 per year. In fact, the average salary for warehouse worker jobs is very close to this number, at $24,750. As recently as this week, Amazon announced it’s raising pay to $15/hr for works, but this decision also came with the canceling out of other worker benefits.
There’s a point to be made that current wages won’t provide enough quality of life for warehouse workers with families.
As of 2017, the federally recognized poverty level for a family of four was $24,600, meaning a warehouse worker with three dependents would be barely over the poverty line.
The truth is that the current landscape is complex, and there is no exact number that is the “correct” wage to pay for warehouse workers.
This can be a great warehouse recruitment strategy if you struggle to keep workers with your company.
But there are other factors at play that could affect the minimum wage of workers moving forward.
Automation, the Gig Economy, and the Future of Minimum Wage
The first and biggest factor affecting the future of warehouse worker wages is the increasing availability of automation for tasks only humans use to be able to do.
This means that as technology continues to increase, there will simply be less demand for warehouse workers. As robots and machines are able to do more and more jobs, this will likely cause wages to remain stagnant.
Perhaps the biggest effect automation has on workers is the reduction in job openings.
Taking California as an example, the number of warehouses has surged in recent years since the recession.
Yet while more warehouses are being built, the increase in the job market simply hasn’t kept pace. Much of this change is due to machine labor taking the jobs usually reserved for humans.
The simple fact is that robots are taking over warehouse jobs, and that trend is only expected to increase as technology continues to develop.
There’s another challenge for warehouse managers as technology shifts: a need for an increasingly flexible workforce.
For Henry Ford, a good workforce was a stable workforce. That premise has held true for decades, but it’s beginning to shift in the opposite direction.
While warehouse workers of the 20th century were valued for dependability, today’s workforce has different needs. Warehouses experience surges in demand, and need to be able to handle those requests quickly and efficiently.
With a massive average turnover rate of 36% for warehouse workers, this simply isn’t possible in the current system.
That’s why one of the most recent changes in warehouse work has been the tectonic shift of the gig economy.
In this new economy, which has grown in the past few decades, warehouse managers have seen the ability to hire contract workers to cover periods of peak demand, while not growing a workforce too large to manage during times of low work.
This provides warehouse workers with a fair minimum wage, while allowing managers to adjust the size of the workforce based on need.
The Bottom Line on Minimum Wage for Warehouse Workers
If you’re not sure what to pay your warehouse workers, you have a number of options.
While rates vary from company to company, the median wage for a warehouse worker is $14 an hour.
As technology continues to advance, many warehouse workers are moving into management roles. These positions require workers to oversee the machines doing most of the labor, and they typically pay higher rates.
While a higher-than-average minimum wage can be costly for the company, it can improve worker satisfaction and slash low retention rates.
As we look towards the future of wages for warehouse workers, the gig economy has shifted how much work takes place. Instead of full-scale employees in the sector, more and more warehouses are moving toward an on-demand workforce.
This provides warehouse managers flexibility with their workforce. Rather than dealing with high turnover and retention rate problems, meeting the demand for a new project is simply a matter of posting an effective warehouse worker job description.
If you’re looking to grow your warehouse workforce, an on-demand worker platform like Wonolo could be your next step.